Larry Goins here and I have spent years perfecting my Filthy Riches model to real estate. If you haven’t heard about my Filthy Riches model, it is all about making more money on a run down $5,000 – $10,000 house no one else wants than most investors make on a $100,000 house… Guaranteed! Yes, believe it or not, you can pick up a great deal on a $5,000 – $10,000 house and sell it for 3-6 times what you paid for it with no buyers list. More about the model later. But where are the properties that I target to generate so much personal income?
Well, I will be at CTREIA this coming Monday the 19th going in DEPTH on what I cover in this blog post. You can register for that event HERE.
The houses in this program are low-income, distressed properties that no one else wants, just not the “dog with fleas” homes. They will need some work before moving in, they just aren’t going to be in too bad of shape. The idea here is you want fixer uppers, no blower uppers. Something that is either livable or close to livable.
These homes might have been on the market for a while for real estate agents, but they are very attainable at a cheap price and with the right approach, can be amazing money making ventures. And the best part is you can buy them at 20-40% of the list price.
So, with all the houses out there that might fit the criteria of a Filthy Riches house, where does a potential investor begin? Some of the most profitable and fastest ways to locate these houses are below.
Vacant houses: We’ve all seen them, the “It’s a Wonderful Life” types of homes. You see tall grass, maybe a window broken or a shutter has fallen down. You know, the kind of house that some people might make fun of… but for the right person, it’s everything they’ve wanted and a huge money maker for you.
In a typical deal, the property owner might have inherited the house from a relative or bought the house as a rental property, but is tired of being a landlord. Or the last tenant skipped town and the property owner hasn’t been able to generate the funds to fix the house up to re-rent it.
It might be difficult to find the owner of a vacant house. Most counties have tax records online so anybody can look up a homeowner with the correct address to plug in. In fact, you may just find someone willing in the local tax department to steer you in the right direction, particularly if a home’s taxes are in arrears. Or, you might be able to solicit information from a neighbor, either personally, or through their information via county records and people finder sites.
One “last resort” method that I learned a while back that has been used: take your own “for sale” sign and plunk it on the lawn with your name and number on it. Invariably, the message will get back to the homeowner, who will call you to find out why you put a sign on their yard. This is kind of sneaky but it works. And hey, no harm done.
If you do have the homeowner’s name, you can contact a credit reporting agency and buy a “credit header.” These look like credit reports on a person – minus their actual credit information – which contains all their contact information, including current phone numbers. To find a qualifying credit agency, just Google credit header.
Realtors: Many properties can be found directly through real estate agents. Before contacting one, you might want to look through their website or realtor.com for properties under $30,000. From here, you can contact the Realtor and use a script and projected offer that we discuss in the Filthy Riches course. Even if they don’t have anything readily available, you can always ask them to put you on a notification list if they get more properties under $30,000.
So, why would Realtors be willing to work with you if they’re only getting a 6% commission on a house listed for $30,000 that you pick up for $10,000? That would only be $300, right? Wrong. Many listing agreements have a minimum commission, which research has shown can be around $1,500 per property.
REO Realtor: A third option is to locate and utilize a local REO (real estate owned) Realtor. An REO Realtor is a person who works directly with banks or asset managers who have foreclosed on a property. Call one of these Realtors and ask them to pull up a report for you that uses these words: REO, Bank Owned, corporate owned, Seller Addendum Required or Foreclosure. These lists will have the coordinating listing agents that worked on these properties. From there, you have a new list of Realtors that work with banks and asset managers who traditionally work with these types of properties.
Bank Owned REOs: You might also be able to find properties on bank’s REO websites. This is a great way to look for properties that are listed before a Realtor has a chance to list it on the MLS or their own website or Realtor.com. If you’re looking to get a jump on the competition, this is a great avenue to explore because you can find properties before other investors have even seen them.
Free Classified Sites: You can use sites such as Craigslist to search for properties or to list your own ad to get homeowners to contact you. If you’re looking for property, be sure to use search criteria such as “handyman special”, “fixer upper”, “cheap”, “cash”, etc.
Houses for Sale Sites: These are similar to classified sites, although they are tailored specifically to real estate transactions, both selling and buying. Sites such as propbot are classified sites but are real estate specific.
eBay: You can find some great deals on eBay, although you might have to do a little weeding through the ads. Go to realestate.ebay.com and use similar keyword searches as you would for a classified ad. Additionally, if you bid and buy a house through eBay, make sure you get a general warranty deed or special warranty deed. If they are offering a quit claim deed, it may be because there are back taxes or code enforcement issues involved. Regardless, title insurance will help verify that there are no back taxes.
Auctions: Look for local auction companies and make sure you are on their regular mailing or email list. Also, search websites such as auction.com for properties. Attending live auctions can also help you build your buyer list.
Code Enforcement: Local code enforcement officers can tell you what properties may have code violations against them. They may not be able to get a hold of the owners or the owner may not have the ability to fix the code issues. Some code enforcement officers may be hesitant to provide this information to you, but these records are public information.
A Few Other Sources: Other sources of property information are property management companies (who work with low end property rentals and might know who wants to get out of the business), hard money lenders (who make rehab loans and may have to foreclose on a property for nonpayment), bird dogs (someone who house hunts for you) and “for rent” signs. Often landlords may be willing to sell their properties.
These are some great areas to look if you want to focus on the fastest, best and easiest ways to find properties in order to start making money as soon as possible.
Be sure to register for the monthly meeting HERE. I will be going in depth on how to find and evaluate these properties.
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